Blue Label reports robust annuals with strong margin growth

Mark Levy (left) and Brett Levy, the joint CEOs of Blue Label. Picture: Supplied

Mark Levy (left) and Brett Levy, the joint CEOs of Blue Label. Picture: Supplied

Published Aug 26, 2022


Blue Label Telecoms, a JSE-listed firm which specialises in selling prepaid airtime, electricity and ticketing, yesterday posted robust annual results with strong gross profit margin growth.

Brett Levy, who is a joint chief executive, said: “The next few years look really good for Blue Label. We’ve come out of Covid strong after two great years."

For the year ended May 31, 2022, the group, which is in the process of recapitalising Cell C, said headline earnings per share rose from 86c a year ago to R1.17. Earnings before interest, tax, depreciation, and amortisation (Ebitda) was up by 25 percent.

On inclusion of the gross amount generated on PINless topups, prepaid electricity, ticketing and gaming, the effective increase in revenue equated to 10 percent from R66 billion to R72.3 bn.

The gross profit margin increased by 16.5 percent from 12.7 percent in the comparative period. Its gross profit rose 23 percent on the back of a 10 percent improvement in gross revenue to R72.3bn.

Reportable revenue was R17.8bn, from R18.8bn previously, a decline of R1bn.

The group, which paid R5.5bn for a stake in Cell C in 2017 and holds a 45 percent stake, said the recapitalisation of Cell C was expected to be finalised in September.

According to Blue label, Cell C reported a net loss of R2.4bn in the 12 months ended May 31, 2022, from a net profit from the previous year of R2.4bn. Cell C is struggling with a debt burden of R7.3bn.

Levy said Cell C's numbers would probably improve after the completion of the recapitalisation.

“On the date of the recap, the forex reverses. R1.5bn (net loss) is on international debt, and interest on that debt. That’s also written off at the recap. That’s R2.3bn of the R2.4bn. In the current financial year, there were also once-off costs of R1.3bn for lawyers, financiers, and once-off fees that relate to the recap, which is an absolutely reverse, so they pull it out of the normal loss profit. So in our view, you want to see less than approximately 800m when you go back to our half-year results from our presentation,” he said.

Levy said Cell C would release its results for the year ended December 31, 2021, and the six months ended June 30, 2022, in September.

Levy said the proposed acquisition of Telkom by MTN should happen very quickly. Last month, both telecommunication companies announced that MTN was in talks to buy Telkom.

Blue Label’s share price was trading up about 1 percent yesterday following the release of its annual results. Its share price increased by almost 24 percent in the past year.


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